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The UK economy has entered into a period of deflation for the first time in 55 years, new figures from the Office for National Statistics show.

Figures for the year to April show prices fell by 0.1 per cent in the year, with the ONS' consumer price index reaching a record low since it began reporting consumer price index figures in 1997.

The last time the UK had negative inflation was March 1960 when inflation fell 0.6 per cent, according to experimental data from the ONS, and for the first time since comparable records began in 1989.

However the retail price index - which had been the measure of inflation in the UK economy from 1947 up until 2013, when it was replaced by the consumer price index - entered into a deflationary period in 2009, which was reported then to be the first comparable drop in prices since 1960.

Bank of England Governor Mark Carney warned last week in the central bank's quarterly inflation report the UK economy would“briefly” enter into a period of negative inflation.

“A temporary period of falling prices should not be mistaken for a damaging spiral of deflation,” he said.

Economists define negative inflation as a short-term period of price deflation, with deflation used to describe a longer period of price deflation.

The ONS said the downturn in prices was led by transport services, with fares likely impacted by the timing of Easter this year.

Inflation has also been driven by sterling's strength against other currencies, lower oil prices and the supermarket price war.

However, prices have remained high in some asset classes, notably property, where in London house prices have risen 39 per cent since the 2008 banking crash.

The consumer price index does not include UK house prices, which are reported to have risen 9.6 per cent in the year to March.

The ONS said food prices were down three per cent in April, and petrol and diesel prices dipped 12.3 per cent in the year, which served to cut the headline inflation rate.

The Eurozone entered into deflation last December, though prices recovered marginally following the deployment of a euro 1.1 trillion quantitative easing scheme in January, though prices remained flat across the 19-member region in the year to April, up from -0.1 per cent in March.

However, price improvements in the Eurozone was largely attributed to the rebound in oil prices.

Commenting on the ONS inflation figures, Kevin Doran, chief investment officer at Brown Shipley said: “Despite today’s inflation numbers showing a fall into negative territory, investors shouldn’t be fooled into thinking this is an accurate representation of the state of inflation in the UK.

“You don’t have to look far to see that there is an abundance of inflation in asset prices, largely in bond and equity markets, with people rightly talking about bubbles in each of these respective asset classes, particularly tech stocks.

“Furthermore, contrary to the story today’s figures may tell, I see inflation as the dog that hasn’t barked, yet.

“In my view, it’s a misconception to think that inflation will stay low for the foreseeable future and that we’re going to experience anything similar to prolonged Japanese-style deflation.

“It’s inevitable that with asset price inflation at such levels, that this will filter into real world inflation – critically however, I don’t see markets pricing this rise in inflation and the associated risks appropriately.”

He added: “Ultimately, until the models used to measure inflation capture real world inflation and asset price inflation, the figures produced each month will at best only tell half the story and at worst distort the truth.”